The popular crypto exchange Coinbase has officially announced its plans to go public via a direct listing, not an Initial Public Offering as originally believed. Many crypto companies are looking to the public markets for more capital.
Coinbase made the announcement in an official blog post on January 28, in which it shared its plants to achieve a direct listing of its Class A common stock. The proposed listing is expected to be pursuant to a registration statement on Form S-1 with the United States Securities and Exchange Commission (SEC).
A Form S-1 is the initial registration form required by the SEC for companies based in the US looking to register new securities. This form will allow the SEC to evaluate the information provided by Coinbase on regards to its capital process, business model, prospects of the planner security, and other relevant information.
Coinbase Faces The Bureaucracy of Getting Listed
As the listing would be in the form of a direct listing instead of an Initial Public Offering (IPO), as was initially rumored back in July of 2020, no new shares would be issued. This will allow employees and investors to sell their existing stock to the public without the need for “lock-up” periods.
While an IPO would dilute the price of each share due to the sudden increasing number of shares, a direct listing would not have the same effect as the number of shares remains stable and will remove the need to rely on investment banks.
In a memo sent to Coinbase employees, CFO Alesia Haas said: “We believe a direct listing more closely follows the ethos of crypto and Coinbase because it democratizes access and opportunities for all investors,”.
A Move Months in the Making
The possibility of Coinbase going public has been a matter of speculation and public discussion since July of 2020 when Reuters reported the claims from three sources. Back then, it was believed that the listing could be taking place the same year and would be achieved by an IPO but plans…